Dabur India Ltd.

Initiating Coverage
Dabur India Ltd.

October 06, 2021

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 Dabur India Ltd.

Industry LTP Recommendation Base Case Fair Value Bull Case Fair Value Time Horizon

FMCG Rs. 616 Buy in Rs 613-619 band and add more on dips to Rs 557-563 band Rs. 670 Rs. 716 2 quarters

HDFC Scrip Code DABIND Our Take:

BSE Code 500096 Founded in 1884 in Bengal by Dr. SK Burman to mass produce and dispense Ayurvedic medicines for diseases such as cholera, malaria and plague,
NSE Code DABUR Dabur India Ltd. (Dabur), the world’s largest Ayurvedic and natural healthcare company, has come full circle in the pandemic year of 2020-21. Turning
Bloomberg DABUR:IN opportunity into crisis, Dabur came out firing on all cylinders, bolstering its time tested Ayurveda portfolio by introducing a slew of products in formats
as varied as powders to capsules.
CMP Oct 5, 2021 616
Equity Capital (Rs Cr) 176
Over the past few years, Ayurveda has gained currency with the new-age consumers seeking traditional remedies for their health and personal care
Face Value (Rs) 1
needs. The demand for Ayurvedic Healthcare products, particularly in preventive healthcare and immunity building witnessed a surge in the wake of
Equity Share O/S (Cr) 176
the Covid-19 pandemic. While many companies have joined the immunity bandwagon, Dabur, with its 136-year-old heritage, traditional herbal
Market Cap (Rs Cr) 108935
positioning, and strong R&D, claims the ‘right to win’ here.
Book Value (Rs) 43.6
Avg. 52 Wk Volumes 3146319 Besides healthcare, Dabur has strong positioning in various categories including fruit juices (#1), oral care and hair care (#2), all of which have
52 Week High 658.7 natural/Ayurveda at its heart. Dabur is a unique play on fast-growing Ayurveda sector. Dabur’s positioning as world leader in Ayurveda/Herbal
52 Week Low 483 products, renowned portfolio of brands, demonstrated ability to create new categories and sub-categories further backed by superior distribution
network makes it well placed to capture lifestyle changes-led growth in the consumer goods space, while giving it an edge over competitors.
Share holding Pattern % (Jun, 2021)
Promoters 67.36 Valuation & Recommendation:
Institutions 25.25 Covid-19 has turned out to be an inflection point for Ayurveda and in turn for Dabur who after subdued performance over FY16-20 due to
Non Institutions 7.39 macroeconomic headwinds reported solid 14.6% YoY growth (FY21) in domestic FMCG sales led by stellar 31.9% YoY growth in healthcare driven by
Total 100.0 42.5%/30.6% YoY growth in health supplements/OTC & Ethicals.

Dabur has always been admired due to its wide product range and strong rural play (45% rev mix). However, the company was performing below its
potential leading to FY21. Extensive product range was limiting management’s focus (defensive approach due to focus on many brands). Rural play
(acceleration) was looking more of a hope than a reality (given disruptions; demonentisation, GST, consecutive droughts). What helped Dabur during
the pandemic, we believe, was its CEO Mr. Mohit Malhotra, who had taken charge just a year before in Jan 2019. Post Mr. Malhotra’s appointment,
Dabur’s strategy has turned aggressive (outperform market) vs. defensive (riding with the tide). He channelized focus on 9 ‘Power Brands’ (~70% rev
* Refer at the end for explanation on Risk Ratings
mix) to be supported by concentrated media spends and reformulated Dabur’s strategies; (1) Scaling power brands, (2) Driving innovation and
Fundamental Research Analyst renovation for market leadership, (3) Distribution expansion, (4) Operational excellence and (5) Capability.
Harsh Sheth
Harsh.Sheth@hdfcsec.com

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 Dabur India Ltd.
Riding on Covid-19 tailwinds, Dabur’s health supplements (majorly Chyawanprash & Ethicals) reported 42.5% YoY growth in FY21. While the growth
may moderate going ahead, prospects here remain robust given the penetration of health supplements in India is mere ~10% (vs 80% in developed
countries). Also protracted pandemic will mean that people will form new habits for preventive health products boosting the overall heathcare
portfolio. Beyond healthcare too, the company gained market share across key categories including oral care, personal care and packaged juices and
nectars, even as it decided to ramp up its food offerings with the Hommade brand. With gradual lifting of travel restrictions, company’s other
discretionary segments (home care, personal care & beverages) should witness strong recovery. International business (26.4% of sales) which has been
laggard for long time is expected to post double digit growth over next 3-5 years aided by relevant strategic initiatives.

We expect EPS growth of ~13% CAGR over FY21-24E on the back of 11.4% CAGR growth in sales over FY21-24E. While Dabur’s performance over FY16-
20 was on the lower end amongst its FMCG peer group, we expect it to significantly outperform its peers over next 3-5 years, FY21, if anything was the
path-breaking year it needed. We think the base case fair value of the stock is Rs 670 (51.5x Sept’23E EPS) and the bull case fair value of is Rs 716
(55x Sept’23E E EPS). Investors can buy the stock in the Rs 613-619 band (47x Sept’23E EPS) and add more on dips to Rs 557-563 band (43x Sept’23E
EPS). At LTP of Rs 616, it quotes at 47.4x Sept’23E EPS.

Financial Summary
Particulars (Rs Cr) Q1FY22 Q1FY21 Y-o-Y% Q4FY21 Q-o-Q% FY20 FY21P FY22E FY23E FY24E
Revenues 2612 1980 31.9% 2337 11.8% 8,685 9,562 10,843 11,923 13,232
EBITDA 552 417 32.5% 443 24.7% 1,792 2,003 2,316 2,627 2,961
APAT 437 342 28.0% 378 15.8% 1,525 1,693 1,918 2,152 2,443
EPS (in Rs) 2.5 1.9 28.0% 2.1 15.8% 8.6 9.6 10.9 12.2 13.8
RoCE (%) 43.5 44.3 51.3 55.2 61.9
P/E (X) 71.4 64.3 56.8 50.6 44.6
EV/ EBITDA (X) 59.8 52.4 45.1 39.4 34.7
(Source: Company, HDFC sec)

Q1FY22 Result Update

Dabur’s Q1FY22 performance was inspiring with a beat in revenue, volume and EBITDA. Dabur’s net revenue grew by 32% YoY (- 13% in Q1FY21 and
+25% in Q4FY21). Domestic revenue/volume growth were at 35/34% YoY, 2-year CAGR at 12/10% vs. Britannia’s 12/13%, Nestle’s 8/6%, Marico’s
7/2%, Colgate’s 4/0%, Emami’s 3/2% and HUL’s 2/0%. Despite a heavy base, health supplements/digestives/OTC/ethical were up 25/16/52/51% YoY.
In home & personal care (HPC), oral care/hair oils/shampoo/home care/skin and salon saw growth of 21/38/41/31/-5%. Food saw 18% YoY growth,
while beverages was up 85% on a low base and in the peak season. Dabur saw strong market share gains in oral care, hair oils, home care,
Chyawanprash and juices. International revenue grew by 29% YoY with 34% YoY cc growth.

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 Dabur India Ltd.
On the profitability front, Gross Margin contracted by 131/64bps YoY/QoQ (-10bps in Q1FY21 and -35bps in Q4FY21) to 48%. It was impacted by steep
raw material inflation and restricted price hikes (~3%). Employee/ A&P/other expenses grew by 15/29/34% YoY. Dabur, through its cost savings
initiatives, saved Rs.25-27 Cr in Q1FY22. EBITDA margin expanded 10bps YoY (+91bps in Q1FY21 and +5bps in Q4FY21) to 21.1%. EBITDA grew by 33%
YoY. PBT grew by 34% YoY while PAT grew by 28% YoY on increase in tax rate.
Overview of Dabur

Dabur - Consolidated Sales Mix Domestic FMCG - Sales Mix Intertnational Business Mix - FY21

Others, 2.8%
Beverages, 12% Foods, 1%

Health Supplements, 23% Americas,

Skin Care, 5%
16.3%
F&B, 13% Asia, 22.8%
International,
Home Care, 6% Europe,
26.3% Healthcare, 13.7%
Domestic 39% Digestives, 6% Middle-East,
FMCG, HPC, 48% Africa, 21.9% 25.3%
70.9%
Oral Care, 18% OTC & Ethicals
10%
Hair Care, 19%

Revenue expected to grow at 11.4% CAGR over FY21-24E Expect PAT to grow by 13% CAGR over FY21-24E Steady improvement in return ratios over FY21-24E
13232
11923 70.0%
2443
10843
2152 60.0%
9562
8704 1919 50.0%
1693
1525 40.0%
(in Rs Cr)
(in Rs Cr)

30.0%
20.0%
10.0%
0.0%
FY20 FY21 FY22E FY23E FY24E

FY20 FY21 FY22E FY23E FY24E FY20 FY21 FY22E FY23E FY24E RoCE RoE

(Source: Company, HDFC Sec)

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 Dabur India Ltd.
Long Term Triggers:

Well diversified portfolio: A unique play on Ayurveda

Category Sub-Category Revenue Contribution to Key Brands Revenue Growth Revenue Growth
Domestic FMCG Sales (FY21) CAGR (FY16-20) FY21 (YoY)
Healthcare (39%) Health 23.4% -Dabur Chyawanprash 6.4% 42.5%
Supplements -Dabur Honey
-Dabur Glucose
-Dabur Vedic Suraksha
-Dabur Pure Herbs
Digestive 5.6% -Hajmola 4.3% 2.2%
-Pudin Hara
-Hingoli
-Dabur Nature Care
-Sat Isabgol
OTC & Ethicals 10.0% -Dabur Honitus 1.4% 30.6%
-Dabur Lal Tail
-Dabur Shilajit
-Dabur Musli
-Dabur Rheumatil
-Dabur Giloy
-Dabur Ashokarishta
-Dabur Lauhasava
-Various other prescription
based products
39.0% 4.61% 31.9%
Home & Personal Hair Care 18.7% -Dabur Amla 2.0% 1.8%
Care (47.9%) -Hair Oil -Dabur Anmol
(15.5%) -Dabur Gold
-Shampoo -Dabur Almond
(3.2%) -Dabur Vatika
Oral Care 18.3% -Dabur Red 7.9% 23.2%
-Dabur Babool
-Dabur Meswak

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 Dabur India Ltd.
-Dabur Lal Dant Manjan
-Dant Rakshak
Skincare 5.2% -Dabur Gulabari 4.6% 17.6%
-Fem
-OxyLife
Homecare 5.6% -Odonil 6.8% (6.8%)
-Odomos
-Sanifresh
47.9% 4.8% 9.5%
Food & Beverages Beverages 12.2% -Real 1.5% (7.1%)
(13.1%) -Real Active
Food 0.9% -Dabur Hommade NA 17.0%
13.1% 1.6% (5.7%)
(Source: Company, HDFC sec)

Covid-19: Watershed moment for Ayurvedic healthcare

The outbreak of Covid-19 pandemic saw an unprecedented surge in demand for health & hygiene products particularly Covid contextual products like
immunity boosters, sanitizers, disinfectants, etc. Leveraging once in a lifetime opportunity, Dabur introduced slew of innovations under the immunity
and hygiene umbrellas to cater to this growing consumer need. Brand communications were revamped to highlight health benefits across relevant
brands and portfolio.

In FY21, Dabur’s healthcare vertical reported a strong growth of 31.9% with 42.5%/ 30.6%/ 2.2% growth across health supplements, OTC & Ethicals
and digestives respectively. As Indian consumers turned to immunity-boosting remedies such as Dabur’s Chywanprash and Honey to cope with the
once-in-a-century health crisis, the company added a Rs 500 Cr to just its annual health supplements business. Chyawanprash and Honey (majority of
health supplements) witnessed 30.6% increased penetration and ~200 bps and ~700 bps market share gains respectively.

OTC & Ethicals also reported strong growth of 31.9% aided by Covid-19 talwinds. In OTC, it offers products across categories such as Cough & Cold
(Honitus), Baby care (Dabur Lal Tail, Dabur Baby Range), Rejuvenators (Shilajit, Dabur Musli) and recently added immunity boosters. Dabur’s Ethicals
houses some of the oldest prescriptive and classical Ayurvedic medicines for preventive and curative medicines to manage a variety of lifestyle
diseases like hypertension, heart health, diabetes etc. Digestives segment (Hajmola & Pudin Hara) was impacted due to restricted outdoor activity,
minimal outside food consumption and closures of restaurants, however, with economy opening up, it will lead the recovery.

momentum to continue….
Dabur being the world’s largest Ayurvedic and natural healthcare company has ‘the right to win’ with its capable and popular product portfolio. While
the demand for these products may moderate once the pandemic subsides, we believe that need for better health & hygiene will get embedded in

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 Dabur India Ltd.
lifestyle and habits of people. This health crisis has become an inflection point in giving a major fillip to multitude of sub-categories; some of these
trends are likely to sustain over the longer term.

Health supplements’ penetration is about 10% in India compared with 80% in developed countries. The company is working on Low unit price (LUP)
formats for Chywanprash besides launching new variants across both honey and chyawanprash. Honey’s penetration in India remains low at ~25%.
With new players marking an entry here, it will lead to market expansion which help the Dabur (~60% market share) with its legacy and wide spread
distribution network.

The contribution from healthcare segment to domestic sales has increased from 32% in FY20 to 37% in FY21. There is huge headroom for growth in
this segment given high under penetration for some categories (health supplements, immunity boosters, etc.) and tailwinds for Ayurveda based
products. Going ahead, we fill this will structurally change the skew Dabur’s product portfolio to give greater prominence to healthcare which is also
margin accretive.

Fast growth of Health Supplements and OTC & Ethiclas was further boosted by Covid-19 Pandemic
70.8%

52.6%

34.7% 51.0%
27.5%
19.5% 19.6% 39.8% 36.9%
14.0% 13.8% 14.4% 24.5%
12.3% 10.2% 12.2% 28.5% 17.7%
3.0% 21.9%
17.7%
13.3% 14.5% 13.9%
8.7% 7.8% 10.0% 4.2% 4.1… -9.5%
5.5%
Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22

-20.6%

Health Supplements (YoY Growth) OTC & Ethicals (YoY Growth)

(Source: Company, HDFC sec)

Oral Care: In Colgate vs Patanjali, Dabur is the winner!

Prior to Patanjali’s entry in oral care segment, Colgate’s position in market was that of sheer dominance. Despite having portfolio of popular brands
(Dabur Red, Meswak, Babool) Dabur was limping with market share still in single-digits. Patanjali’s entry led to frenzied growth of Ayurveda based and
natural products resulting in natural/herbal category’s salience increasing from <10% prior to FY15 to ~35% currently in overall toothpaste market.
Dabur which since time immemorial has been the advocate of Ayurveda turned out to be the silent beneficiary in the fight between Colgate and

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 Dabur India Ltd.
Patanjali. Today, it commands over ~54% market share in ‘naturals’ segment and has outgrown the industry by fair distance over last few years
indicating solid market share gains. It is closing in on HUL which is second in the pecking order after Colgate and would most likely, in next couple of
quarters, become 2nd largest player in oral care space.

Dabur’s flagship toothpaste brand Dabur Red Paste already crossed Rs 1,000 Cr sales last fiscal, while Meswak has become a 100 Cr brand. While
South India happens to be the biggest market for Red, East comes second, followed by the West and North India. In fact, in states like Odisha, Tamil
Nadu and Andhra Pradesh, Red is the no.1 toothpaste brand and close 2nd in Assam and West Bengal. With aim for deeper penetration in North India
and to rival Patanjali, Dabur has introduced Dant Rakshak, a flanking brand with low price point while Dabur Herb'l Clove was launched to consolidate
leadership position in South. Further, it has been introducing LUPs of Rs. 10 with attractive trade schemes to drive the penetration. It has also
extended its portfolio with introduction of Ayurvedic mouthwash (Dabur Red Pulling Oil).

Post FY15, Dabur has significantly outperformed Colgate & overall oral care industry indicating market share gains
25.0% 23.2%

20.0%
17.0% 16.9%
16.0%
14.9%
15.0% 14.0%
12.0%
11.6%
9.4% 9.4% 9.6% 10.0%
10.0% 9.0%
8.0% 7.5% 8.0%
6.6% 7.0%
5.8%
5.0%
5.0% 3.5% 3.0%3.0% 3.1%
1.8%
1.0%
0.0%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

-5.0% -3.0%

Dabur's Oral Care (YoY Growth) Colgate (YoY Growth) Oral Care Industry (YoY Growth)

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 Dabur India Ltd.
Launched Dabur Herb’l , Dabur Dant Rakshak & Red Oil Pulling

Dabur has steadily increased its market share over past

few years riding on tailwinds for naturals/herbal
products
20.0%

15.0%

10.0%
Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 Mar'20 Mar'21

Dabur's Market Share (Toothpaste)

(Source: Company, HDFC sec)

Hair Care segment’s growth to be driven by premiuisation and NPDs

The hair care segment contributed 18.3% to Dabur’s domestic sales in FY21 with ~85%/~15% split amongst hair oils and shampoos. Hair oils is one of
the most penetrated FMCG categories with ~90% penetration across India. Marico is the de-facto market leader in hair oil by virtue of it enjoying near
monopolistic status in coconut oil segment. While Dabur competes with Dabur Anmol brand (~5% market share) in coconut oil segment, it has strong
play in non-coconut oils and Value Added Hair Oils with its flagship Dabur Amla brand along Dabur Vatika umbrella. In FY16-H1FY18, the hair care
segment growth was affected due to rural slowdown coupled with severe price war with Marico. However, Dabur has got aggressive since then with
new launches while also creating flanker brands such as Brahmi Amla, Sarson Amla and Badam Amla to take on the competition resulting in steady
performance along with market share gains. Given the higher penetration of hair oils, the growth here will be driven by premiumisation and Dabur has
been consistently flooding the markets with premium range of products.

Though shampoos like hair oils are highly penetrated in India, the per capita consumption is at dismissal level. Shampoo markets is dominated by HUL
& P&G with >60% value share, however, we believe with growing awareness regarding harmful effects of sulphate and paraben products along with
increasing preference for herbal shampoos as per the survey conducted by ThePrint, Dabur (~7% market share) is likely to benefit through its Ayurveda
based Dabur Vatika portfolio. In FY21, the overall shampoo segment reported strong double-digit growth while its new launch, Vatika Ayurvedic
shampoo already cornered 2% market share in e-commerce.

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Premiumisation through Vatika Hair Oil Portfolio Creating moat around Dabur Amla (Center) by launching flanker brands Brahmi Amla (L) and)
Sarson Amla (R)

Curtailed discretionary spends affects Skin care and home care categories
While the skin care category (5.8% of domestic sales) witnessed 17.6% YoY growth in FY21, the major portion for the growth could only be attributed
to recently launched Dabur Sanitize brand in hygiene segment, besides handwash under Fem brand, barring which the segment would have witnessed
a double-digit decline due to its discretionary nature. Within a year of launch it reported sanitizer sales in excess of Rs. 100 Crs on the back of huge
Covid tailwinds, however, the tailwinds are behind us now. Dabur’s three key brands here include Dabur Gulabari for mainstream rose-based skin care
products, Fem for facial bleaches and hair removal creams, and OxyLife for oxygen-infused premium facial bleaches and facial products. All three
brands are typically for out-of-home consumption, particularly salon based and largely discretionary. In Q1FY22, Fem saw 3x YoY growth in sales over
lower base while Oxy and Gulabari portfolios have seen revival too. Thus, with gradual opening up of markets we expect sharp recovery here.

Likewise, home Care business (5.3% of domestic sales) was impacted with 6.8% YoY decline in FY21 given Covid induced lockdown and by virtue of it
being discretionary and lifestyle-driven category. Key brands here include Odonil (air fresheners), Sanifresh (Surface cleaners) and Odomos (Mosquito
Repellents). Odomos being more of out-of-home usage brand remained affected, however, we expect the brand sales to pick up with lift in lockdown
restrictions as increase number of people will be drawn to use with motive of prevention against possible disease post outbreak of Covid. Additionally,
it is also looking at expanding the addressable market of Odomos from only mosquito repellent cream to broader Household Insecticides play (already
launched mosquito racquet and nets). It is also looking to revamp Odonil portfolio to be broader air care player not just restrict to air fresheners (~60%
market share).

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Building a second leg of growth with Foods & Beverages
Dabur had pioneered the packaged juices market in India over 24 years back with the launch of brand Réal. Dabur today has the largest range of
packaged fruit juices in India with a range of more than 30 under the brands Real and Real Activ. With aggressive launches over last couple of years,
the company now has marked its presence in all sub-categories of soft drinks in addition to milkshakes.

Recent initiatives undertaken by Dabur to drive the growth in beverages include;

a) Launched milk based beverages under Réal Frappe Milkshakes to capture its growing demand specifically in north India. Ended FY21 with 1.3% market
share (~Rs 800 Cr size) in milkshakes.
b) Launched immunity boosting/wellness juices under the brand Réal Wellnezz, besides tender Coconut Water under Réal Activ.
c) Entered fruit drinks segment - Dabur has ~60% market share in Juices & Nectars market (~Rs 1700 Cr). However, the distribution here was restricted
here as the products here are place at Rs. 100-120 price points. Plugging this gap, it entered food drinks (flavored water) segment where the products
are placed at attractive Rs. 10 & 20 price points and have been received well. With launches in the drinks segment, the total addressable market for
Dabur has gone up to Rs 800 Cr from Rs. 1,700 Cr.
d) It has also entered even larger carbonated beverage segment offering 3 variants (Jeera Cola, Nimbu and Lemon). However, it’s still in its nascent stage
here.
e) Earlier, when Real was an urban centric brand, the distribution was restricted to ~1,00,000 outlets. With recent launches at lower price points
(Rs10/Rs20), the company plans to leverage existing distribution across urban and rural.
f) Dabur is working towards doubling distribution network. It is also expanding the portfolio to its HPC distribution, which is almost 10x larger compared
to beverage distribution. As business scales up, it will set up a separate distribution channel for small towns.

The Beverages vertical reported 7.1% decline in FY21 as a result of it being a discretionary and out-of-home (~40% of beverage category) usage band
with higher salience of HoReCa (Hotels, Restaurant & Catering) channels which remained impacted due to Covid induced lockdown. Gradual lifting of
travel restrictions coupled with right strategic initiatives undertaken by the management, we expect this segment to clock high double-digit growth
rate on fairly low base in FY22 (85% YoY growth in Q1FY22). Further, the beverage industry in India has robust prospects and is poised to grow in mid-
to-high teens over medium term. We expect Dabur with its established portfolio and solid distribution infrastructure to be at forefront of this growth.

Foods business to witness multifold growth over next 3-4 years

In Foods category, Dabur offers products under ‘Hommade’ brand. Its offerings here include culinary pastes, sauces, pickles, etc. Marking entry into
staples, it also launched Mustard Oil and Dabur Cow Ghee. While the contribution from foods business was Rs. 63 Cr in FY21, the company plans to
increase it to Rs. 100 Cr by end of FY22 and further make Hommade, a Rs. 500 Cr brand in next 3 years by developing 2-3 strong sub-categories.

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 Dabur India Ltd.
(L-R) Dabur has aunched premium juices (Real Fruit Power), milkshakes (Real Frappe), carbonated beverages (Real Fizzin), fruit drinks

The ‘power’ of nine

Dabur has identified 9 ‘Power Brands’ – that account for more than 70% of its total Sales. As part of this strategy, the company has been putting
disproportionate investments behind these brands to improve visibility, enhance distribution and drive innovation by way of new products, variants
and format launches. It has also created flanker brands to support its power brands and to cater to varied consumer needs.

A majority of these Power Brands fall in the Health Care space, where Dabur has the right to win. With this strategy, Dabur seeks to not just grow the
categories where it is currently a market leader, but also sizably increase its presence and market share in some large categories where its brands are
relatively smaller in size.

The 9 ‘Power Brands’ of Dabur

Brand Product Category Strategy
 Focus on region specific products and variants
 Enhance distribution (chemist, MT channel) and drive
Healthcare

consumer frequency across seasons (~60% in winters)

Health  Youth and Kids focused new launches (Chocolate, Mix
Supplements Fruit, Sugar Free)

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 Dabur India Ltd.
 Launching range of premium variants
 Strengthen fitness proposition
 Increase consumer frequency via targeted campaigns
Health  Extending distribution (modern trade, convenience
Supplements formats)

 Connecting with millennial through digital media

 Leveraging brand equity to other premium segments
 Scaling up its powder fizz format
Digestives

 Extended brand beyond baby massage oil (entire baby

care portfolio)
 Emphasizing ayurvedic positioning
OTC  Distribution enhancement

 New formats and variants (lozenges, hot sip)

 Reinforcing Ayurvedic positioning
 Distribution enhancement
OTC

 Extend brand to premium formats

 Market share gains from non-natural toothpastes
 Driving rural penetration through LUPs
HPC

Oral Care  Digital connect

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 Dabur India Ltd.
 Strengthening core brand (Dabur Amla) through
aggressive spends and high value proposition
 Creating moats around Dabur Amla through flanker
Hair Care brands like Brahmi Amla/Sarson Amla
 Launch premium variants

 Scaling up with launch of new variants

 Extending distribution beyond South India
 Cross-pollinating Vatika’s highly successful international
Hair Care portfolio in India

 Extended Real portfolio in adjacent categories (fruit

drinks, milkshakes, etc.) to increase addressable market
 Drive consumer frequency

F&B
F&B
 Expansion in low through put geographies
 Premiumisation via health-based variants

How does Dabur fare against competition?

While the competition hasn’t been new to Dabur, in recent times, under the new leadership of Mr. Mohit Malhotra (appointed Jan 2019), Dabur has
not only defended its turf but also charged at competition. The Power Brands strategy has worked very well as the brands continue to outgrow the
industry across all categories, winning market share (refer table below) even when the broader category growth are negative in some cases.

Additionally, when a new competitor enters the market, they increase awareness, advertise the category and this benefits the market leader, as the
consumer will buy the product which is more prominent at the point of sale and has better availability (For instance, Patanjali’s entry with its Ayurveda
portfolio in the past fast-tracked Dabur’s growth specifically in oral care and health supplements category). Likewise, emergence of new competitors
specifically in healthcare segment (majorly in Chyawanprash and Honey) will expand the category size which will benefit the market leader, Dabur,
which enjoys higher brand equity and wider availability.

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 Dabur India Ltd.
Dabur has reported solid market share gains across most categories indicating higher power of its brands

325 324
288 300

230

MS Gains (in bps)

196 202 202
182
128
94 101
75 84
43 44 37
10 14 10

Chyawanprash Glucose Powders Digestive Tablets Baby Massage Oils Shampoo Hair Oils Toothpaste Mosquito Repellant Juices & Nectars Honey
Creams
Mar'21 vs Mar'19 Mar'20 vs Mar'19

(Source: Company, HDFC sec)

Market positioning of Dabur in key categories in India

(Source: Company, HDFC sec)

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 Dabur India Ltd.
Renewed focus to drive the growth in International business
Dabur has a significant international footprint (26.4% of FY21 Consolidated sales) with manufacturing presence across eight countries and brand
presence in over 100 countries across the globe. Dabur follows local supply chain strategy wherein most products are made in countries where they
are consumed with miniscule exports from India (1-2%), and therefore it doesn't faces any pushback. The top 5 markets for Dabur in the international
business are Egypt, Saudi Arabia, USA, Turkey and Nepal. ‘Glocal’ is the part of Dabur’s core strategy when rolling out products abroad. Accordingly, in
Middle East products cater to the Arabs as the primary target audience. For instance, the Vatika Hammam zeit range is exclusive to the region and not
available elsewhere. Similarly, in its hair care range under Vatika, argan, black seed and olive as core ingredients, all very popular in this region.

Organic International business has evolved to full-fledged personal care entity from a pure-play hair-oil business (93% of revenue in FY06 to <40% in
FY21). The acquisition of Hobi Kozmetik (leading manufacturer of personal care products in Turkey) and Namaste (ethnic hair care products market in
the USA and Africa) in FY11 led to an increase in the addressable market for Dabur.

In recent past, Dabur’s international business has reported subdued growth which can be attributed to lower crude price (MENA -25%), other macro-
economic and geopolitical headwinds. Likewise, the contribution from the international business has decreased from 31.8% in FY16 to 26.4% in FY21.
However, in past few quarters it has witnessed sharp recovery. Going ahead, the management is confident of double-digit growth supported by right
strategic initiatives (distribution expansion, partnering with MT channels, new launches, increased ad-spends, etc.). Additionally, with cost cutting
initiatives undertaken recently there’s large room for margin upside. Given the portfolio of established popular brands in India and overseas along with
strong Indian diaspora in most geographies, Dabur also has excellent cross-pollination opportunities.

Intertnational Business Mix - FY21 Dabur's international business has reported stagnant growth
3000 40.0%
35.0%
2500
Americas,
30.0%
16.3% 2000
Asia, 22.8% 25.0%
1500 20.0%
Europe, 15.0%
1000
13.7% 10.0%
Middle-East, 500
25.3% 5.0%
Africa, 21.9%
0 0.0%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
International Revenues (in Rs Cr) Sales Contribution (%) = RHS

(Source: Company, HDFC sec)

16
 Dabur India Ltd.
Dabur has strong presence in Hair Care across MENA Region
Category Saudi Arabia Egypt UAE Morocco Algeria
Hair Oil #1 #1 #2 #1 #1
Hair Cream #1 #1 #1 #1 #1
Hair Gel #1 #2 #1
Hair Mask #1 #1 #1
(Source: Company, HDFC sec)

Distribution expansion to aid the growth

Dabur has one on the widest distribution networks in India with total reach of ~6.9 mn outlets. It has comparatively higher rural salience (~46% of
domestic sales) which has also aided outperformance over last couple of years given the resilient rural demand. While the company has strong urban
facing brands in its kitty, it is increasingly focused on rural India as it believes, in many ways that is where the real consumption lies (>65% of
population, rapid urbanisation, supportive govt. initiatives, etc.) which can comprehensively outpace urban demand. Likewise, it has increased its
direct rural reach from ~41.4K villages in FY18 to ~69K as of Q1FY22. Besides, to drive deeper into the rural market it has new products, formats and
LUPs (low unit price) products for most brands.

In urban markets, the company has been focusing on ramping up chemist outlet coverage, modern trade coverage as well as e-commerce
channels. By virtue of having strong healthcare portfolio, Dabur has the best chemist coverage amongst its FMCG peers which as of Q1FY22 stands at
2.6 Lakh outlets. It provides an opportunity for cross-selling company’s other products too and given only medical shops were allowed to function
during strict lockdowns, it cushioned the demand. At an overall level, its direct reach stands at 1.4 mn with plans to increase it to 1.5 mn by next year.
Some of the key initiatives undertaken by the company to increase its expansion include:

a) Project RISE- Under analytics- based Project RISE (Regional Insights and Speed in Execution), the company views India from the lens of 12 different
geographical clusters capturing consumer, packaging and media insights from the different clusters and transforming these ideas into quality
products and communications which provide new growth opportunities.
b) Dabur Yoddha – This programme has been piloted in selected states (BR, CG, JH, UP and MP) where Dabur appoints local sales representatives in
their respective villages to drive penetration.
c) Ghar Ghar Ayurveda Campaign - Retail initiative focused on adding more stores to its network and expanding the assortment of Dabur products at
existing partner outlets.
d) It has dedicated Medico Marketing team which organises health camps and engages with doctors to create awareness about company’s products
creating demand pull. Enhanced doctor coverage from ~48K in FY19 to ~71.8K in Q1FY22.
e) Dabur Arogya - aims to provide Ayurvedic treatment to various ailments through telemedicine – capitalizing our Ayurvedic knowhow, panel of
Ayurveda doctors and facility of online consultation.

17
 Dabur India Ltd.
Focus on market expansion in South India – South India’s contribution in Dabur’s sales increased from ~16% in FY20 to 18.7% in FY21 on the back of
Project RISE and various initiatives, however, it is still lower as compared to other FMCG players(25-30%). Historically, the company had neglected the
southern market, focusing mainly on the northern and eastern ones as it believed the power brands may not be relevant to the South. In recent past,
increasing its focus on South, it is launching region-specific products (Dabur Herb’l Alpha Range, Dabur Gold Coconut Oil and Cold Pressed Sesame Oil,
etc.) along with taking on board regional celebrities and influencers to strengthen its presence. The strategy has worked well as the company is
witnessing above country average growth in South India with 19% growth in FY21.

Dabur has one of the widest reach Dabur plans to increase its direct reach to ~1.5mn oulets by
FY23E

8
7 6.9 1.5
6.2 1.4

(Outlets in mn)
1.2 1.3
5.5

(Outlets in mn)
5.1 4.7 1.02 1.1
4.5 0.91

HUL Colgate Dabur GCPL Britannia Marico Nestle Emami FY17 FY18 FY19 FY20 FY21 FY22E FY23E

Focused on increasing rural penetration Dabur's chemist coverage Focus on driving Doctor Advocacy by
growing coverage
2.58 2.6

outlets (in lakhs)

Village Coverage

(no. of doctors)
2.4
41473

44068

52298

59217

68999

80000

35000

48000

56111

71050

71830
FY18 FY19 FY20 FY21 Q1FY22 FY23E FY20 FY21 Q1FY22 FY18 FY19 FY20 FY21 Q1FY22
(Source: Company, HDFC sec)

Increasing salience of e-commerce - The pandemic has led to a shift in shopping behaviour of consumers with the propensity for online shopping
increasing. In the post-COVID world, e-commerce has emerged as the most-preferred contactless method of making purchases, among consumers and
this trend is likely to stay. Dabur has also seen its e-commerce business nearly quadrupled from 2.4% of sales in FY20 to 6.4% in FY21 and now 8.2% in
Q1FY22. Targeting this emerging trend, Dabur launched a series of new products exclusively for online markets. Some of these products, co-created

18
 Dabur India Ltd.
with online retailers, continue to be exclusively available only in the e-marketplaces; Dabur Pure Herbs brand, Dabur 100% Pure Cow Ghee, a range of
Hair Oils and Shampoos under the Vatika Naturals and Vatika Select brand, etc. Increased digital spending behind power brands and new launched,
should drive higher salience of the e-commerce channel going ahead.

Increasing salience of e-commerce (as % of sales) Smart brand investments with increasing focus on digital spends
23.6%
8.2% 20.8%

Digital Spends (% of ad-spends)

6.4%
12.6%

2.4%
1.4% 2.7% 3.7%
0.8%

FY18 FY19 FY20 FY21 Q1FY22 FY18 FY19 FY20 FY21 Q1FY22
(Source: Company, HDFC sec)

Focused brand investments to increase the visibility

In accordance with its ‘Power Brands’ theory, the company has pursued aggressive marketing strategies wherein ad-spends as percentage of sales
have increased from 7.1% in FY19 to 8.2% in FY21. Even during Covid impacted FY21, the company increased its ad-spends by 21% while most FMCG
peers had reduced their ad-spends. The brand communications were revamped to highlight health benefits across relevant brands and portfolio. Also,
in its bid to have a deeper connect with millennials and GenZ, Dabur has been disproportionately increasing its ad-spends in favour of digital media
over past few years which landed it a significant advantage post pandemic where India’s digital ecosystem saw a revolution of sorts with the
acquisition of many new users. This strategy has not only significant created brand awareness amongst but also generated superior ROAS (Return on
Ad Spends). Going ahead, the company expects to maintain ad-spends at ~9% of sales over next 2-3 years to support new launches while keeping
aggressive stance with its power brands.

19
 Dabur India Ltd.
Dabur maintained its aggressive ad-spends even during Dabur has sharply increased ad-spends FY21 onwards in line
pandemic year with its Power Brands strategy
1000 30%
784
800

(ad-spends as % of sales)
646 607 608 650 20%
600
10%

14.0%
13.0%
12.7%
12.1%
11.9%
400

10.3%

9.9%
9.0%

8.7%
0%

8.2%

8.2%
7.5%

7.5%
200

7.1%

6.7%
0 -10%
FY17 FY18 FY19 FY20 FY21
Dabur HUL Marico GCPL Colgate
FY19 FY20 FY21 Ad-spends in (Rs Cr) YoY Growth = RHS

(Source: Company, HDFC sec)

Driving innovation and renovation

Several disruptions over FY16-20 (demonetisation, GST, rural slowdown, etc.) had led to muted launches. However, the outbreak of pandemic proved
to be an opportune time to unleash the innovation pipeline which it built over the years. The company launched more than 50 products across
categories (mostly in healthcare) and the contribution from New Product Developments (NPDs) stood at its highest - 5.6% of sales in FY21 (vs 1-2% in
FY19). Existing products were revamped brand to highlight health benefits across relevant brands and portfolio.

Recently, it has set up an Innovation Lab to fast-track the development of new products and shorten the lead time to launch the products. This
coupled with increased R&D spends has led to NPD cycle time drastically reducing to ~2 months as compared to 1.5 years earlier. The company’s focus
is to extend the power brands to white spaces and adjacencies wherever these brands have the right to win, and do not have a risk of dilution. We
believe the company has just about scratched the surface in categories such as home-care and foods and we could thereby see few launches here in
near future. Besides by virtue of having strong liquidity position, company is also open to opportunities for inorganic growth.

20
 Dabur India Ltd.

(Source: Company, HDFC sec)

Financial Triggers
Tailwinds for healthcare, recovery in discretionary portfolio, NPDs; backed by aggressive media spends to lead revenue growth
Dabur had reported a relatively subdued growth over FY16-20 affected by macroeconomic headwinds including demonetisation, GST, rural slowdown
(has higher rural salience, ~46%). Concurrently Mr. Mohit Malhotra took over helm in Jan 2019. His appointment has brought in renewed vigour,
visible by aggression in new launches, channelized focus through ‘Power Brands’ strategy, distribution expansion initiatives (Project RISE), aggressive
media spends and, cost optimisation programmes (Project Samriddhi). With all bases covered, pandemic affected FY21 turned out to be path-breaking
year for Dabur as domestic FMCG sales grew by 14.6% YoY, led by massive growth in healthcare vertical (32% YoY). While the growth in healthcare
may moderate now with larger base and as Covid threat subsidises, the long term prospects are robust for health supplements given high under
penetration (~6% Chyawanprash, ~25% Honey) and in OTC/Ethicals (driven by aggressive NPDs).

Power Brands strategy has worked wonders and will continue to drive the growth. Going forward, we expect Dabur to deliver sales growth of 11.4%
CAGR over FY21-24E aided by a) growth in healthcare as discussed above, b) recovery in discretionary home care and personal care segments, c)
premiumisation led growth in oral care and hair care, d) superior growth in beverages with increased addressable market (new product launches) and
specifically in foods and e) strong recovery in international markets (expectation of growth in mid-teens in medium term)

21
 Dabur India Ltd.
Revenue is expected to grow at 11.4% CAGR over FY21-24E
13232
11923
10843
9562
8533 8704
7827 7849 7614 7722

(in Rs Cr)
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY24E
(Source: Company, HDFC sec)

Margins expansion driven by cost saving programmes and favourable product-mix

COVID-19 accelerated companies across bourse, the need to revisit the business models and processes, fast-track alternate revenue opportunities,
test and fine-tune the business continuity. While Dabur under Mr. Mohit Malhotra had already started working on the same even prior to Covid, giving
a further boost, it launched Project Samriddhi in June 2020 with an eye on cost optimisation and value enhancement across various levers of the
business using Zero Based Budgeting. Under this it is working to reduce costs across functions from raw materials, manufacturing and packaging to
logistics and supply chain to consumer and trade. Owing to this project, Dabur made savings of Rs. 53 Cr in FY21 and further aims on making savings
worth Rs 100 Cr in FY22.

Additionally, the contribution from healthcare has increased to 34% of domestic FMCG sales in FY20 to 39% in FY21. Increasing salience of healthcare
is margin accretive. Dabur is also looking at premiumisation opportunities in other parts of portfolio. Headwinds in input costs will be mitigated by
calibrated price hikes (~3% hike taken in Q1FY22) and cost optimisation initiatives. Though, in next couple of quarters we may witness a slight
contraction in gross margins, we believe the worst of input cost inflation is behind us. We expect EBITDA margin expansion of 150 bps over FY21-24E.
Likewise we expect. Likewise, we expect it’s PAT to witness 13% CAGR growth over FY21-24E.

22
 Dabur India Ltd.
Dabur’s Cost and Cash Flow Management Strategy
...will lead to steady improvement in margins

21.4% 22.0% 22.4%

20.6% 20.9%

17.6% 17.7% 17.7% 18.0% 18.5%

FY20 FY21 FY22E FY23E FY24E

PAT Margin EBITDA Margin

(Source: Company, HDFC sec)

Steady improvement in working capital cycle

In FY19, Dabur had implemented Project Lakshya (to revamp supply chain) which entailed improving range availability at C&FA and distributors,
improving lead time adherence, improving the OTIF (On-Time and In-Full) metric for modern retail, reducing logistics cost and finished good inventory.
This led to reduction in inventory days from 38 days to 31 days in FY19. Last year, it also implemented Continuous Replenishment System (CRS) to
manage inventories better which further helped to reduce pipeline inventory by 5-7 days. It also rolled out Drishti (front-end ERP platform) for
distributors which gives better sales transparency and complete visibility of distributors’ sales and stock levels and also better control over dealer
reimbursements and claim settlements. Additionally, it upgraded to SAP HANA, enhancing the capability of IT systems. All these initiatives compound
to higher returns while making organisations future ready.

Strong balance sheet, return ratios continue to improve

Dabur has very strong liquidity position with cash equivalents of ~Rs 5,200 Cr with expectation of maintaining healthy run rate of cash accruals at Rs
1100-1200 Cr per year. The company has recently announced setting up of new greenfield unit near Indore (MP) to cater to rising demand for
healthcare and personal care products and will be investing ~Rs 550 Cr over the next 3 years for same. With war chest of Rs.5,200 Cr in its balance
sheet the company is on constant lookout for a suitable acquisition candidate.

Key risks
Inflation in input costs – It is exposed to commodity price fluctuations in a wide range of materials which are drawn from the agriculture and
petroleum value chains. In recent past, input prices have remained elevated and the overall portfolio has seen 9-10% RM cost inflation. The company

23
 Dabur India Ltd.
has been able to pass part of inflation through ~3% price hike. Sustained rise in input costs or inability to pass the costs going ahead may affect
profitability in near term.

Rise in competitive intensity - The domestic FMCG business continues to witness intense competition with multiple established players, including
some large multinational players as well as domestic companies. There have been increased activities by FMCG companies in the ayurvedic and herbal
segment in the last few years. With increased marketing and promotion, awareness among consumers towards natural and herbal products is likely to
have improved, leading to expansion of the market segment. Nevertheless, Dabur being an established player with a sizeable market share had faced
competitive pressure in the past and remains exposed to risks of heightened competition

Slower growth in international business - Dabur’s international business grew by 1% in constant currency (CC) terms while the margins contracted by
230 bps. Inability to revive the growth here could be a risk to our estimates.

3rd Covid-19 wave in India – There’s looming threat of 3rd Covid wave in India. Devastating 3rd wave could significantly the recovery specifically in
home care/personal care/digestives/beverages segments for which the demand is discretionary/out-of-home consumption dependent.

Exchange Rate Fluctuations - Being a transnational enterprise (26.4% international sales), it is exposed to risks from fluctuations in exchange rates.
However, the company does take appropriate measures to hedge its overall exposure.

About the company

Dabur was established by Dr S K Burman in 1884 in Kolkata. Incorporated in 1936, the company operates in key consumer product categories like Hair
Care, Oral Care, Health Care, Skin Care, Home Care and Foods. Dabur marries age-old traditional wisdom with modern-day Science to develop
products for consumers across generations and geographies. Dabur's FMCG portfolio today includes 8 Power Brands with distinct brand identities --
Dabur Chyawanprash, Dabur Honey, Dabur PudinHara, Dabur Lal Tail and Dabur Honitus in the Healthcare space; Dabur Amla and Dabur Red Paste in
the Personal Care category; and Réal in the Food & Beverages category. In addition, Vatika is an International Power Brand. Dabur offers products in
over 100 countries across the globe and has manufacturing facilities at 20 locations—12 in India and one each in the UAE, South Africa, Sri Lanka,
Egypt, Turkey, Nigeria, Nepal and Bangladesh. The company has built a strong distribution network of over 6.9 million retail outlets in India as of
March 2021.

24
 Dabur India Ltd.
Dabur has 20 manufacturing units (12-India, 8-overseas) Dabur’s market expansion strategy

(Source: Company, HDFC sec)

Peer Comparison:
Company Mcap (Rs. Cr) Sales (Rs. Cr) EBITDA Margin APAT
FY21 FY22E FY23E FY24E FY21 FY22E FY23E FY24E FY21 FY22E FY23E FY24E
Dabur 108935 9562 10843 11923 13232 20.9% 21.4% 22.0% 22.4% 1693 1918 2152 2443
HUL 636445 47028 51593 55871 60432 24.7% 25.6% 26.2% 26.5% 8187 9284 10445 11326
Marico 72077 8048 9584 10375 11342 19.7% 19.1% 20.6% 21.1% 1162 1309 1560 1761
Colgate 45704 4841 5245 5660 6110 31.2% 30.1% 30.3% 30.4% 1035 1057 1148 1244
Emami Ltd. 25192 2880 3274 3586 3927 30.7% 30.0% 30.1% 30.7% 668 740 814 935
Godrej Consumer 106748 11029 12782 14084 15525 21.7% 21.7% 22.0% 22.1% 1715 1971 2252 2655

Company ROCE (%) P/E (x)

FY21 FY22E FY23E FY24E FY21 FY22E FY23E FY24E
Dabur 44.3 51.3 55.2 61.9 64.2 56.5 50.5 44.7
HUL 27.5 18.5 20.0 21.4 82.2 72.4 65.1 59.3
Marico 55.2 66.3 71.9 79.2 61.9 55.0 46.1 40.9
Colgate 118.4 182.2 161.5 192.2 44.2 43.3 39.8 36.8
Emami 34.7 48.1 60.3 66.2 37.8 34.1 31.0 27.0
Godrej Consumer 21.0 24.4 27.5 30.9 62.1 52.2 45.2 40.2
(Source: Company, HDFC sec)

25
 Dabur India Ltd.
Financials
Income Statement Balance Sheet
(Rs cr) FY19 FY20 FY21 FY22E FY23E FY24E As at March FY19 FY20 FY21 FY22E FY23E FY24E
Revenues 8515 8685 9562 10843 11923 13232 SOURCE OF FUNDS
Growth (%) 10.3 2.0 10.1 13.4 10.0 11.0 Share Capital 177 177 177 177 177 177
Operating Expenses 6775 6892 7559 8527 9296 10271 Reserves 5455 6429 7530 8521 9568 10641
EBITDA 1740 1792 2003 2316 2627 2960 Shareholders' Funds 5632 6606 7707 8698 9745 10818
Growth (%) 7.5 3.0 11.7 15.6 13.4 12.7 Minority Interest 31 36 35 31 27 23
EBITDA Margin (%) 20.4 20.6 20.9 21.4 22.0 22.4 Total Debt 529 472 485 325 305 285
Depreciation 176.9 220.5 240.1 263.9 282.7 301.5 Net Deferred Taxes 23 -5 -5 -5 -5 -5
Other Income 296.2 305.3 325.3 405.5 457.0 537.5 Total Sources of Funds 6275 7172 8291 9125 10156 11213
EBIT 1563 1572 1763 2052 2345 2659 APPLICATION OF FUNDS
Interest expenses 59.6 49.5 30.8 24.3 20.4 19.1 Net Block & Goodwill 1633 1917 1907 2349 2346 2324
PBT 1799.2 1827.7 2057.0 2433.5 2781.2 3177.3 CWIP 81 171 170 172 175 177
Tax 278.6 279.7 361.1 511.0 625.8 730.8 Other Non-Curr. Assets 167 619 227 250 275 302
Adj. PAT 1444 1525 1693 1918 2152 2443 Total Non-Current Assets 1881 2707 2304 2770 2795 2804
Growth (%) 5.7 5.7 11.0 13.3 12.1 13.5 Inventories 1301 1380 1736 1710 1853 2043
EPS 8.2 8.6 9.6 10.9 12.2 13.8 Debtors 834 814 562 637 700 777
Cash & Equivalents 3687 3612 5230 5813 6829 7878
Other Current Assets 62 85 56 78 90 91
Total Current Assets 6220 6289 8047 8715 9977 11334
Creditors 1981 1947 2172 2463 2709 3006
Other Current Liab & Provisions 181 212 223 233 244 255
Total Current Liabilities 2162 2160 2395 2697 2953 3261
Net Current Assets 4058 4130 5652 6019 7024 8073
Total Application of Funds 6275 7172 8291 9125 10156 11213
(Source: Company, HDFC sec)

26
 Dabur India Ltd.
Cash Flow Statement Key Ratios
(Rs Cr) FY19 FY20 FY21 FY22E FY23E FY24E Particulars FY19 FY20 FY21 FY22E FY23E FY24E
Reported PBT 1,724.9 1,727.6 2,057.0 2,433.5 2,781.2 3,177.3 Profitability Ratios (%)
Non-operating & EO items 166.4 232.5 -326.9 -409.4 -460.9 -541.4 EBITDA Margin 49.6 50.0 49.9 49.9 50.5 50.6
Interest Expenses -200.2 -200.1 30.8 24.3 20.4 19.1 EBIT Margin 18.4 18.1 18.4 18.9 19.7 20.1
Depreciation 176.9 220.5 240.1 263.9 282.7 301.5 APAT Margin 17.0 17.6 17.7 17.7 18.0 18.5
Working Capital Change -18.1 -58.0 496.7 198.0 -9.5 -21.9 RoE 25.5 24.9 23.7 23.4 23.3 23.8
Tax Paid -350.7 -308.9 -361.1 -511.0 -625.8 -730.8 RoCE 51.1 43.5 44.3 51.3 55.2 61.9
OPERATING CASH FLOW ( a ) 1,499.1 1,613.6 2,136.6 1,999.2 1,988.2 2,203.9 Solvency Ratio (x)
Capex -225.0 -400.5 -231.1 -705.6 -280.0 -280.0 Net Debt/EBITDA -1.8 -1.8 -2.4 -2.4 -2.5 -2.6
Free Cash Flow 1,274.1 1,213.1 1,905.5 1,293.6 1,708.2 1,923.9 Net D/E -0.6 -0.5 -0.6 -0.6 -0.7 -0.7
Investments 317.5 -364.6 -1,348.1 -250.0 -250.0 -250.0 PER SHARE DATA (Rs)
Non-operating income 244.4 248.2 325.3 405.5 457.0 537.5 EPS 8.2 8.6 9.6 10.9 12.2 13.8
INVESTING CASH FLOW ( b ) 336.9 -516.8 -1,253.9 -550.1 -73.0 7.5 CEPS 9.2 9.9 10.9 12.3 13.8 15.5
Debt Issuance / (Repaid) -240.2 -358.0 12.8 -160.0 -20.0 -20.0 BV 31.9 37.4 43.6 49.2 55.1 61.2
Interest Expenses -51.5 -28.5 -30.8 -24.3 -20.4 -19.1 Dividend 4.0 4.5 4.8 5.8 7.3 8.8
FCFE 2,127.7 1,483.3 900.7 1,633.4 1,955.7 2,250.5 Turnover Ratios (days)
Share Capital Issuance 0.5 0.1 0.0 0.0 0.0 0.0 Debtor days 35.7 34.2 21.4 21.4 21.4 21.4
Dividend -1,597.0 -617.8 -592.1 -927.9 -1,104.6 -1,369.7 Inventory days 55.7 58.0 66.3 57.6 56.7 56.4
FINANCING CASH FLOW ( c ) -1,888.2 -1,043.0 -610.0 -1,112.2 -1,145.1 -1,408.9 Creditors days 84.9 81.8 82.9 82.9 82.9 82.9
NET CASH FLOW (a+b+c) -52.2 53.8 272.7 336.9 770.2 802.5 VALUATION
P/E 75.4 71.4 64.3 56.8 50.6 44.6
One Year Price Chart P/BV 19.3 16.5 14.1 12.5 11.2 10.1
EV/EBITDA 61.2 59.8 52.4 45.1 39.4 34.7
700
EV / Revenues 12.6 12.5 11.0 9.7 8.7 7.8
600 Dividend Yield (%) 0.6 0.7 0.8 0.9 1.2 1.4
(Source: Company, HDFC sec)

500

400
Apr-21

May-21

May-21
Dec-20

Dec-20

Mar-21

Mar-21
Oct-20

Oct-20

Aug-21
Jun-21
Nov-20

Jan-21

Feb-21

Jul-21

Jul-21

Sep-21

Sep-21

27
 Dabur India Ltd.
HDFC Sec Retail Research Rating description
Green Rating stocks
This rating is given to stocks that represent large and established business having track record of decades and good reputation in the industry. They are industry leaders or have significant market share. They have multiple streams of cash flows and/or strong balance sheet to withstand downturn in
economic cycle. These stocks offer moderate returns and at the same time are unlikely to suffer severe drawdown in their stock prices. These stocks can be kept as a part of long term portfolio holding, if so desired. This stocks offer low risk and lower reward and are suitable for beginners. They offer
stability to the portfolio.

Yellow Rating stocks

This rating is given to stocks that have strong balance sheet and are from relatively stable industries which are likely to remain relevant for long time and unlikely to be affected much by economic or technological disruptions. These stocks have emerged stronger over time but are yet to reach the
level of green rating stocks. They offer medium risk, medium return opportunities. Some of these have the potential to attain green rating over time.

Red Rating stocks

This rating is given to emerging companies which are riskier than their established peers. Their share price tends to be volatile though they offer high growth potential. They are susceptible to severe downturn in their industry or in overall economy. Management of these companies need to prove
their mettle in handling cyclicality of their business. If they are successful in navigating challenges, the market rewards their shareholders with handsome gains; otherwise their stock prices can take a severe beating. Overall these stocks offer high risk high return opportunities.

Disclosure:
I, Harsh Sheth, MCom, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our
compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Research Analyst or her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the
Research Report. Further Research Analyst or her relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock – No
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This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and
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HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research
Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
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